Greece's Euro Exit Seems Inevitable - page 10
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Fin min Varoufakis says that Europe does not want Grexit
Talking to the BBC's Today radio programme this morning Varoufakis said:
"I don't believe that any sensible European bureaucrat or politician will go down that road"
Asked whether the European Union and the International Monetary Fund were bluffing he replied
"I hope they are."
This dangerous political game continues with all eyes now on Thursday's Eurogroup meeting
That's not to say we won't get a torrent of headlines in the meantime
Germany Warns That Greece Could Leave the Euro
Germany gave its most explicit warning yet that Greece could eventually leave the euro as European Union officials try to hammer out a last-minute deal over bailout funds.
“The shadow of a Greek exit from the euro zone is becoming increasingly perceptible,” German Economy Minister and Vice-Chancellor Sigmar Gabriel wrote in a Bild newspaper opinion column to be published on Monday. “Greece’s game theorists are gambling the future of their country. And Europe’s too.”
Prime Minister Alexis Tsipras sent a delegation to Brussels for weekend talks on proposals to close differences on pensions, taxes and a primary surplus target. With positions hardening, the talks are European Commission President Jean-Claude Juncker’s last attempt to reach a compromise, according to an EU official, who asked not to be identified.
European leaders from German Chancellor Angela Merkel to EU President Donald Tusk have voiced growing exasperation with Greece’s brinkmanship that has pushed Europe’s most-indebted country to the edge of insolvency.
Gabriel’s Swipe
The swipe at Tsipras’s government, coming from one of the more conciliatory voices toward Greece among Germany’s politicians, underlines the hardening of attitudes in Berlin and elsewhere the longer the standoff drags on. In February, just after Tsipras was elected, Gabriel stressed the need for dialogue with Greece rather than rejection of the government’s proposals. Gabriel is also the head of Germany’s Social Democratic Party.
Representatives of the International Monetary Fund, the European Central Bank and the European Stability Mechanism are waiting in the wings to join the negotiations if progress is made between Greece’s envoy and Juncker’s chief of staff. The aim is to reach a deal before markets open on Monday, the EU official said.
“We can confirm that the IMF will participate in the talks in Brussels today,” Randa Elnagar, a weekend duty officer for the Washington-based IMF, said by e-mail in response to a Bloomberg query. ‘‘That’s all we have for now.’’
Greek stocks fell 5.9 percent on Friday, with bank shares dropping 12 percent, as talks remained deadlocked. The yield on Greek 2017 bonds rose 137 basis points to 20.03 percent. U.S. and European equities and the euro-area’s higher-yielding bonds also tumbled amid growing concern Greece will run out of time for reaching a deal to stave off default.
IMF, Juncker
The IMF spiked an attempt by Juncker to broker a compromise allowing Greece to defer 400 million euros ($451 million) of cuts in small pensions if it reduced military spending by the same amount, Frankfurter Allgemeine Sonntagszeitung reported, citing unidentified people with knowledge of the negotiations. The EU declined to comment on the report.
Greek Finance Minister Yanis Varoufakis said he won’t sign up to a fiscal plan that doesn’t work. While a primary budget surplus of 1 percent of gross domestic product was achievable in March, a deterioration of the economy since then means that it isn’t any more, he said.
This should ‘‘be the last negotiation taking place in crisis conditions,” Varoufakis said in an interview broadcast Sunday on Alpha TV. “The target of the negotiation is to get out of the crisis. For that you need Greece to go back to markets, so a restructuring of the debt is needed.”
The talks are difficult and positions are still far apart, an EU official said on Sunday, speaking on condition of anonymity. Senior European Commission officials are worried whether an agreement can be reached on time, the official said.
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More on weekend Greece talks - "collapsed after just 45 minutes"
Negotiations in Brussels between Greece and its creditors collapsed after just 45 minutes on SundayThe focus now shifts to a June 18 meeting in Luxembourg of euro-area finance ministers (Eurogroup)
Via Bloomberg:
Out of Options and Time, Tsipras Faces Greece’s Moment of Truth
Greek Prime Minister Alexis Tsipras has four days to capitulate to demands to keep Greece in the euro -- or prepare for a messy divorce.
The collapse of talks in Brussels on Sunday has made Thursday’s meeting of euro-area finance ministers the next deadline in the saga that opened in 2009. Bills are piling up and the aid spigot, shut for 10 months, is about to be withdrawn.
“This week is deal week,” Mujtaba Rahman, head of euro zone analysis at Eurasia Group in London.
So what happens if the gathering in Luxembourg is a bust?
Once the prospect of a successful negotiation fades so do the odds of Greece paying the $1.7 billion it owes the International Monetary Fund this month. A default makes it difficult for the European Central Bank to keep Greece’s banking system afloat. The ECB, which will discuss the future of its emergency liquidity on Wednesday, is unlikely to cut it off completely until the bailout agreement expires on June 30.
Without the ECB’s largesse, Tsipras may need to impose capital controls to keep hard currency in the country as savers empty out their bank accounts in droves.
Capital Controls
There is a 60 percent chance that Greece will skip out on its IMF payment, the ECB will turn off its tap and Tsipras will be forced to take extraordinary measures to stop funds fleeing the country, according Jacob Kirkegaard, a senior fellow at the Peterson Institute for International Economics in Washington.
“It is increasingly clear that Tsipras is not a leader that the euro area can ‘do business with’ and hence there are no longer any political gains for the euro area in trying to coax him towards the political center,” he said.
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Greek finmin Varoufakis: Won't present new reform proposals on Thursday
Reuters with the headline of the comment from Greek finance minister Varoufakis
Greece Won’t Present New Proposal to Eurogroup to Unlock Aid
Greece has no plans to present new proposals at a meeting of European finance ministers this week, signaling the country won’t make further concessions to unlock bailout funds needed to avoid default.
Greek Finance Minister Yanis Varoufakis told Bild newspaper any new proposals would need to be thrashed out at a lower level before they could presented to the finance ministers set to meet June 18 meeting in Luxembourg. He said that Greece remains willing to find a solution but creditors need to take Greece’s proposals seriously to end the impasse.
Stocks declined as the extent of the remaining policy divide was laid bare after weekend talks billed by European officials as a last attempt to end the standoff broke up early.
Europe needs a “strong and comprehensive agreement, and we need this very soon,” European Central Bank President Mario Draghi told lawmakers at the European Parliament in Brussels on Monday. “While all actors will now need to go the extra mile, the ball lies squarely in the camp of the Greek government to take the necessary steps.”
With signs that negotiating fatigue was stoking intransigence on all sides, some euro-area officials publicly raised the prospect of Greece’s exit from the currency region as the Greek government suggested it had reached the limits of its ability to make concessions. Greece is resisting demands for further cuts in pension spending as well as tax increases.
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EU, IMF and ECB are pulling the oldest tricks in a book : buying time and then they will tell "Go", That is why there is no deal, and there will be no deal. Conditions they are posing on Greece are conditions for a slave country, not a country that saved ECB by receiving all the bad loans ECB could not explain for (otherwise they would have to show their private account)
Same for Lagarde - see how 400.000.000 euro can be given to somebody just because he is a "friend" of her
Tsipras: Greece Ready to Give ‘Big No’ to Bad Agreement
Greek Prime Minister Alexis Tsipras said he’s ready to take responsibility for rejecting the terms of a deal on aid if creditors' demands are unacceptable.
With a viable solution “the Greek government recently elected by the Greek people will bear the cost of carrying through this difficult agreement,” Tsipras told reporters in Athens on Wednesday. Without one, “we will assume the responsibility to say ‘the big no’ to a continuation of the catastrophic policies for Greece.”
Negotiations between Greece and its creditors are close to breakdown as finance ministers prepare to meet in Luxembourg on Thursday. The gathering has been billed by officials as a last chance to seal an agreement on as much as 7.2 billion euros ($8.1 billion) in bailout aid. With creditors despairing of finding a way forward, Greece’s central bank warned of the dire consequences that are looming.
The Athens Stock Exchange erased its gains after the prime minister’s comments, falling 1.5 percent at 3 p.m. in Athens, after dropping more than 9 percent over the previous two days. The index is on track for its lowest closing price since September 2012.
The stand-off between Greece and its creditors continued today, but both sides are sounding even more ominous than yesterday. Greek Prime Minister Alexis Tsipras warned that he would “say the big no” to any agreement that continued “catastrophic policies” dictated by the country’s bailout. European Commission President Jean-Claude Juncker accused Tsipras of misrepresenting the creditors’ policy proposals to Greeks. The finance ministers of the Czech Republic and Slovakia, who will be involved in yet another attempt to resolve the crisis at tomorrow's meeting of euro-area finance ministers in Luxembourg, said a Greek default was now a realistic scenario. German Finance Minister Wolfgang Schaeuble told a parliamentary hearing in Berlin that the government was working on a contingency plan in case no deal with Greece is reached. In Athens, central bank governor Yannis Stournaras warned that the crisis could become “uncontrollable,” potentially leading to a Greek exit from the European Union, not just the euro area.
Taken at face value, the apocalyptic pronouncements would suggest that no deal will be reached by the end of this month, when Greece will need to pay the International Monetary Fund more than 1.5 billion euros. On the other hand, the gloom and doom is perhaps a little too theatrical to lose hope.
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Greece runs up a Russian blind alley while looking for help
Reuters report comments from Russia's deputy finance minister ahead of Tsipras's visit
ECB not sure if Greek banks will be able to open on Monday: officials
The European Central Bank told a meeting of euro zone finance ministers on Thursday that it was not sure if Greek banks, which have been suffering large daily deposit outflows, would be able to open on Monday, officials with knowledge of the talks said.
Greek savers have withdrawn about 2 billion euros from banks over the past three days, with outflows accelerating rapidly since talks between the government and its creditors collapsed at the weekend, banking sources told Reuters.
The 2 billion euros taken out between Monday and Wednesday represent about 1.5 percent of total household and corporate deposits of 133.6 billion euros held by Greek banks as of end-April. Prior to this week, withdrawals had been running at 200-300 million euros a day.
Officials with knowledge of the discussions, which took place at a closed-door meeting of the euro zone finance ministers and the European Central Bank and International Monetary Fund, said the deposit outflow was the only thing mentioned by ECB President Mario Draghi during his intervention.
Two officials said that during the meeting, Eurogroup chairman Jeroen Dijsselbloem asked ECB Executive Board member Benoit Coeure if Greek banks would be able to open tomorrow.
Coeure answered: "Tomorrow, yes. Monday, I don't know."
Dijsselbloem, asked at a news conference after the meeting about the pace of deposit outflows in Greece, said:
"I cannot confirm those figures, but it is certainly worrying. If people are taking their money out of the banks, they are very worried about what the future might bring.
"It is strongly in the interest of the Greek people to reach an agreement. The responsibility for that lies with the Greek government. They have been put in office with a great responsibility, to look out for the future of their people, and the outflow of the deposits from the banks is a sign of great concern about that future," he said.
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